3. Review Example 9.3 (page 286)and solve the following problemto appreciate how procurement strategy could contribute to profit.Suppose GM's revenue =$250 billion, annual spending on parts =$200 billion, and net profit margin was 0.6%.

(a) How much can GM increase the profit from a 1.0 percent reduction in annual procurement spending? Show your work.

(b) To achieve the same increase in profit in (i) through sales, how much of the revenue increase (in $) must GM have? Show your work.

4. Review Kraljic's supply matrix (Figure 9.4, page 287).Review the current purchasing activities in your own company (or interview an organization), identify two specific purchased items/services, one for "strategic partnership" and one for "simplify and automate" strategy. Describe the nature of the selected items (profit impact and supply risk) and justify the selected strategies.